While all of us have enjoyed the results of Chinese inventions from paper, printing, tea and porcelain, to the less-cited toilet paper, pasta, ice cream and football, it’s likely we’re going to benefit from many more in our lifetimes, particularly in the technology category.

Building efficiency, isn’t just about creating shorter queues in hospitals, making paying for things easier, or more efficient ride sharing. It’s also servicing those softer, but still important needs such as customer service.

In short, Chinese consumers are receiving technology-assisted service and convenience. This has helped build an ecosystem of innovations that are increasingly moving beyond Chinese borders, and it is also a reason Chinese have growing expectations when buying a product or service, which need to be met or exceeded. China Skinny can help with that. We hope you enjoy this week’s Skinny.

Chinese Consumers

The Wild, Wild East: China’s urban consumption will almost double from $3.2 trillion today to $5.6 trillion in 2020 according to BCG. Whilst many are talking up inland China as the biggest untapped opportunities, there are still many up-and-coming cities in eastern China such as Suqian, Xuzhou and Wuhu, and still lucrative niches in the crowded Tier 1 markets of Shanghai, Beijing, Guangzhou and Shenzhen.

Three Reasons Why Chinese Consumers Love the Queen – and Why Britain Should Too: When Chinese consumers were asked which words they associate with Britain, top of the list was the Queen. 27% of Chinese shoppers said they get their inspiration for fashion and home style from the Queen and the royal family, with the royal warrant important for increasing desirability of British lifestyle and brands from more than half of those surveyed, according to Qing Wang from the University of Warwick Business School.

Best CRT Post Today? Not in China: China’s advertising laws have been overhauled this month, imposing fines of up to ¥1 million ($157,350) for brands that use superlatives such as the “highest”, “best” or “national level”. Brands are also banned from using child stars under the age of ten to promote their products.

Internet, Mobiles & Ecommerce

It’s All Go: Venture-capital investment in China reached a record $15.5 billion in 2014, more than triple 2013’s level. China has more than a dozen tech businesses with a valuation of over a billion dollars. “Chinese consumers are now so demanding and globally minded…you need to be world-class to serve China,” says Gary Rieschel of venture-capital firm Qiming Ventures.

How to Buy a Xiaomi in Two Short Months: Xiaomi may be the world’s second most valuable startup after Uber, and China’s top selling smartphone brand, but it still isn’t straight forward to buy one of their devices. How long will the flash sale marketing tactic work for them with brands like Huawei nipping at their heels?

A Day in the Life of a Chinese App Addict: Last year, Chinese smartphone users downloaded 185 billion apps, 59% of all downloads worldwide. Gaming apps were the most popular category in China but shopping, video-streaming, and image-and-video apps for social media are catching up quickly.

China Plows Big Money Into Australian Agriculture: Chinese consumers perceived Australian-grown food to be three times as safe as food grown in China, and 50% healthier than food grown in the U.S., Brazil or France according a Reputation Institute survey in 2013.

Chinese Tourists

Robust Growth Forecast for China’s Outbound Tourism: 42% of Chinese tourists surveyed said they were willing to spend as much as 20% of their living expenses on travel according to World Tourism Cities research. While outbound tourism numbers grew 11% last year, their spending increased 28%.

Dutch Villages, Small Cities Look to Attract More Chinese Visitors: Dutch villages such as Giethoorn are seeing two thirds of their hotel guests coming from China. They’re catering for the visitors with initiatives such as Chinese language travel cards, smaller bicycles, firmer beds and noodle cookers. Chinese visitors to the Netherlands grew 15% last year and are expect to grow 18% this year, spending almost twice as much per person on average.

Health

Toads Skin, Herbs Feed China’s $2.7 Billion Cancer Fight: Sales of traditional cancer treatments, with ingredients such as toad skin and turtle shell, surged 35% to almost ¥17 billion ($2.7 billion) last year in China. That’s twice as fast as the 17% growth for the overall ¥65 billion ($10.2 billion) cancer drug market. A new cancer case occurs every 10 seconds in China.

In 2013, there were 2.9 million U.S. Dollar millionaires in China. They were 38 years old on average. 12-months later, following a year of slowing GDP growth, low to negative house price movements in most cities, and the end of double digit growth for most luxury brands, more than one million Chinese millionaires have joined the ranks. It is another indicator of the continued growing affluence of individual Chinese.

China’s rising wealth is apparent across almost all demographics, not just its millionaires. Significantly more consumers have enough spending power to happily drop $20 on going to the cinema, buy imported products, travel abroad, and for many, invest overseas. And invest they are. In the space of a year, Chinese have overtaken Canadians to become the top international buyer of U.S. residential property, shelling out two and half times more on U.S. houses and condos than the Canucks. With Chinese stocks’ recent free fall and the sluggish domestic property market, increasingly sophisticated Chinese investors will look to further diversify their portfolios abroad.

There’s been no shortage of coverage about the stronger RMB making handbags cheaper in Paris, but the average Vancouverite, Aucklander and residents in almost any major city in the Western world are probably more aware that the rising currency is making their property look even more attractive to Chinese buyers.

The rising RMB will assist the current structural shift happening in China’s economy – moving from just producing cheap goods to further up the value chain, as well as encouraging consumerism. An appreciating currency helps makes the acquisition of foreign IP and brands more affordable. If we look at how many millionaires are being created in China, and how fast sovereign funds are growing and looking internationally, we can expect to see more Club Med, House of Fraser, Volvo and Lenovo-style acquisitions happening, in addition to a rise in foreign real estate purchases. Likewise, foreign products and services will also become cheaper for consumers, increasing consumption, which will bode well for imported products that are marketed well. China Skinny can assist with that. We hope you enjoy this week’s Skinny.

Chinese Consumers

Can You Understand the Chinese Consumer in Just One Hour?: 23-minute podcast from McKinsey covering three themes about the Chinese market: 1) its complexity; 2) it’s the world’s most competitive market; and 3) the state’s decisive role in shaping the environment is as far reaching as the beer and art market.

‘Why Do Chinese Lack Creativity?’: A popular online essay touched on the reasons for Chinese lack of creativity and innovation, but urged Chinese to “not sell themselves short”. The anonymous essay received many comments and resonated widely with Chinese.

Starting From the Bottom: China Finally Embraces Entrepreneurs: China may not strike many people as a “start-up nation”. However, with a generation of ambitious young Chinese, increased government support, the rise of angel investors, and the loosening of the educational system, China’s start-up scene is on the rise.

Alipay’s US Chief Talks Expansion, Uber China Partnership and More: Unlike Paypal, Alipay helps you in every day life including buying goods in physical stores, paying utility bills and catching cabs offline. American retailers are increasingly allowing Chinese shoppers to buy with Alipay, including businesses such as Macy’s, Saks Fifth Avenue, Carter’s, Jewelry.com, and Walgreen’s Skin Store.

Chinese Consumers Deserve Better Service: On the surface, Chinese consumer savings rates indicate a reluctance to spend. To increase spending, a lot could be done to improve service – just look at the cinema, there are plenty of cheap/free alternatives but the service and experience is good enough for millions of Chinese to shell out $20 a pop to see a film every week.

Investment & Migration

Growth Continues, But Skies Are Not All Blue For Wealth Managers: Private financial wealth globally grew by nearly 12% in 2014, with China’s 38% growth in the equity market playing a big part in the Asia Pacific region (excluding Japan) surpassing Europe for the first time according to BCG. At the end of 2014 there were 17 million millionaires worldwide; China had four million millionaires – a million more than last year, but still behind the U.S.’s seven million.

Vancouver’s Housing Crisis: No, Not Like Before, And Not Like Anywhere Else: Since 2005, Vancouver’s housing prices have turned into a ‘freak show’, with the unaffordability index growing by 100%. Over the same period, San Francisco’s unaffordability grew by just 16%, Sydney 11% and New York actually became 14% more affordable. From 2005 to 2012, Vancouver attracted about 45,000 rich migrants under wealth-determined schemes, more than any other city in the world – the large majority were from China. Auckland, New Zealand has the next worst unaffordability growth in the Western world at 39%. Chinese have also become the top international buyer of U.S. residential property, investing more than two and a half times what second placed Canadians spent for the year ended March 2015.

More Urban Chinese Consumers Plan to Buy Homes: 14.7% of urban Chinese residents were prepared to buy a house within the next three months according to a People’s Bank of China survey, up from 13.8% in the first quarter. 18.2% expected house prices to rise in the coming quarter, versus 15.6% three months ago. House prices in May grew 0.06% – the first rise in 13 months.

Environment

Study Maps Concentrations of Antibiotics in Chinese Waterways: China accounts for almost half of the world’s antibiotic usage, with 52% being used on animals increasing the likelihood of drug-resistant bacteria. The drugs are entering China’s waterways through human and animal excretion, with the worst affected areas in Beijing and nearby provinces, Shanghai and surrounds, and Guangdong – China’s three wealthiest areas.

Easier Access to Europe for Chinese: Under a new pilot visa service, a single visit to a UK visa application centre will allow Chinese visitors to submit a visa application for both the UK and Belgium. With a Belgium visa, they will also be able to visit the 25 European countries in the Schengen area. Chinese have surpassed India as the top country for visa applications to the UK.

Luxury

Samsonite Makes Move Downmarket to Protect China Sales: Samsonite’s prospects are improving in China since the luggage-maker moved downmarket. “Earlier you wanted to display the highest-priced goods at the front of the store so the consumer feels good about your brand and comes in to shop,” said the company’s CEO. “Now you want to display the mid-price of your offering so the customer is not getting scared.”

China Skinny wishes you a happy 2015; we hope you saw it in with a bang!The beginning of the year is often a time to plan ahead for the following 12-months. Whether you are already in China, or entering this year, here are a few points to keep in mind:

1. Strive to Understand Chinese Consumers

Understand who your consumers are. Where do they shop? What will catch their attention? How have businesses been successful with similar products and target markets? In addition to the answers to these questions, understand that Chinese consumers are becoming more sophisticated and diverse each day. Just because a foreign business is present in China does not mean they will succeed, especially with the growing competition – not only from foreign brands but also from homegrown brands

2. Be Bold

Entering China with an online-only strategy has worked nicely for some but it is not going to work for everyone, especially those with low to moderate brand recognition. How are you going to make a splash and get noticed? Chinese consumers are not limited in their options as more imported goods and services attempt to attract their wallets. How will you stand out? Not every organisation or company may have the means to open a store, but how about a pop-up store? Or can you join a road show to exhibit your goods? Combining offline efforts with digital efforts is one way to smartly and efficiently capitalise on opportunities in China. There are ways to make a buzz beyond store openings, one just has to be smart about it.

3. Venture Out

First and second tier cities are fun and exciting, with their bright lights and big malls, but they’re becoming very crowded. Is there a place for your goods or services outside of the major cities – the most landlocked province in China was the number one seller of bikinis online per capita! Provinces in China differ enormously so trying to tackle a population as large as China’s with a single countrywide strategy can be difficult, if not impossible. Geographical differentiation needs to be taken into account and regional strategies should to be considered to maximise available opportunities and provide consumers with relevant products, services and messaging.

4. Be Committed and Flexible

China changes fast. Entering China and getting setting up is only the first step to tackling China. To succeed in China you must not only be committed but also informed on the constant changes that happen in China. A long-term strategy that is flexible is fundamental when entering China.

5. Keep it Real!

Stay true to your brand. In a low-trust society such as China it is vital to stick to your foundation. Attempting to change your brand to satisfy someone’s notion of what appeals to Chinese shoppers often backfires in the medium term. Understand your market, the available opportunities, and how your products or services best fit into that market. There are ways to localise and appeal to Chinese consumers while still remaining true to your brand. Presenting your brand as authentic and retaining your roots while taking a China-fied approach has a more sustainable chance of success than changing your brand’s identity.

China isn’t easy by any measure, but keeping these five points in mind will ensure your business is well placed to maximise the opportunities that China presents. All the best for 2015 in China!

With the Football World Cup beginning tomorrow, many Chinese will have their eyes on Brazil. Despite the fellow BRIC’s time zone being 10-13 hours behind China’s, CCTV is banking on a bumper of a tournament and a massive 530 million Chinese are expected to follow it online according to iResearch.

Following Tmall’s outlay of ¥141.6 million ($22.7 million) sponsoring scorer rankings for CCTV’s World Cup coverage, Alibaba has just shelled out another ¥1.2 billion ($192 million) to buy half of the championship football side, Guangzhou Evergrande. Who knows, post the IPO cash injection they may be buying European clubs – one-upmanship on WeChat’s endorsements by European-based footballers.

For our readers who are football fans, we hope you manage to digest this week’s Skinny before the carnival begins. All the best for your respective teams!

Chinese Consumers

Coming Clean: Celebrities Paid to Endorse Soap on Weibo: Guangzhou’s Time Weekly reports that celebrities are paid between ¥20,000 and ¥1.2 million (US$3,200-$192,00) to post about products on their Weibo. To better regulate online marketing, China’s revised Consumer Rights Protection Law came into effect in March, stipulating that organizations and individuals endorsing goods and services will share responsibility if they are found to have problems, meaning celebrities can be found liable for false advertising. On the subject, here are the appearance fees for China’s top-10 celebs, eight of whom are women.

Chinese Consumers Pay a High Price for Luxury: A Deutsche Bank study has found that the USA is home to some of the best consumer bargains. Although China has some good deals on commodities and public transport, name brands are pricey. Luxury sedans are up to 37% more in China than the USA and leather goods are about 50% higher. Great result for Chinese tourism to the USA.

Sports

Alibaba Buys 50% Stake in Chinese Soccer Team for $192 Million: In true playboy billionaire fashion, Jack Ma’s Alibaba has bought a 50% stake in championship football side Guangzhou Evergrande for ¥1.2 billion ($192 million) after a 15-minute negotiation. Given Alibaba’s $6 billion spending binge on acquisitions over the past year, the purchase price was barely a rounding error.

Internet, Mobile & eCommerce

Alibaba Will Soon be a Mobile Telco, Close to Launching Ali Telecom in Coming Weeks: Alibaba will be the first of a likely run of China’s online big boys to launch a virtual mobile network. The company launched a promotional page last week, claiming their initial prepaid network will cover 29 cities. This will give the online giant even more valuable data about consumers and will no doubt bring some synergies with their other mobile initiatives.

Chinese Tourists

Quality, Not Quantity: Britain has a poor scorecard for attracting Chinese tourists, with arrivals increasing by 8% last year — much less than the worldwide increase of 17% and 23% in the USA. Nevertheless, Chinese tourists spend four times as much as the average foreign visitor to Britain, believed to be encouraged by tougher visa requirements.

Malaysia Thinks It Can Woo 2 Million Tourists Despite Missing MH370: Tourism Malaysia’s promotions in China will soon be resumed in hope of clawing back some of the 30% of Chinese bookings cancelled in April. Malaysia is confident it can attract 2 million Chinese tourists this year, up 15% on 2013. The campaigns may win over some of the Chinese who were considering visiting Thailand, where the coup has caused a 19% drop in arrivals in the first four months of this year.

China’s Thrill-Seeking Wealthy Travellers Aim for Adventure: For China’s uber-wealthy travellers who spent an average on $150,000 per trip, the most popular holiday was on an island, followed by a self-drive trip, food & shopping, South & North Poles and a nature adventure. Bolivia, the Poles and Africa top the wish list of destinations, with Mediterranean cruises and New Zealand the most desired first world destinations.

Why Chinese Booze Costs More Than Fine Wine at Auction: Half litre bottles of Moutai Baijiu distilled in the 80s, often found under beds and in the back of pantries, fetched between ¥60,000 ($9,700) and ¥70,000 ($11,300) at a Beijing auction last Sunday. The going rate 18-months ago was less than half that. 1982 Lafite Rothschild sells for around $5,000 for a 750 ml bottle.

Netizens Gobble Up Watermelon Microblog: The Office for Watermelon Sales Service in Zhengzhou, Henan launched its Weibo account late May and had 22,200 followers within a week and thousands of comments on its 60-odd posts.

Property

Luxury Lifestyle Report: High Net Worth Real Estate Consumers: 54% of affluent Chinese would choose a waterfront property for their next real estate purchase. 93% wanted to make a legacy purchase to remain in the family. 51% wanted space to display the art collection and 48% would be most proud to own an eco-friendly home.

That’s The Skinny for the week! We’d love to discuss how we could help with your marketing, online initiatives or research to take advantage of China’s opportunities. Just email us at info@chinaskinny.com or call us at +86 21 3221 0273 so we can learn more about your objectives and let you know how we can help.

There is a common perception in the West that Chinese lack creativity – great rote learners and copiers, but not too creative when it comes coming up with something new and original. Well the folk down at Forrester Research spend 2011 surveying 330,000 Social Media Users and uncovered some very interesting facts that may change your perceptions about Chinese creativity.

When it comes to Social Media, the ‘uncreative’ Chinese are actually more than three times more creative that their counterparts in the USA and Europe. If business in China is starting to awaken, the Internet has been up for hours, having devoured breakfast, done pilates, read the news and looking for the next task of the day.

Forrester Research’s definition of a Social Media Creator was someone who:

Publishes a blog

Publishes their own web pages

Uploads videos they create

Uploads music they create

Writes & posts articles or stories

In Europe, just 23% of social media users are considered ‘creators’. Across the Atlantic in America, the land of Google, Facebook, Twitter and umpteen other Internet revolutions, its just 24%. Sail a few thousand miles across the Pacific and you’ll find 76% of social media users are creating. More than three quarters! After decades, Chinese citizens finally have a voice, and they’re making the most of it…